It is not uncommon for individuals finding themselves in the middle of divorce or family proceedings to find themselves in the middle of financial difficulty as well. Bankruptcy proceedings can affect divorce or family proceedings on several fronts, including, but not limited to, the following situations:

1. If one partner or spouse declares bankruptcy, the other could be left solely responsible to financial institutions for an entire joint debt, even if that debt was incurred solely by the other partner or spouse, or the parties agreed that the other partner or spouse would assume full responsibility for it.

2. A declaration of bankruptcy could wipe out an obligation (whether contractual or not) to pay a lump sum or structured property settlement to the non-bankrupt partner or spouse.

There are ways to protect yourself from issues arising from your spouse or partner declaring bankruptcy. Terms of settlement can be structured in such a way that regardless of a spouse or partner declaring bankruptcy, they are still required to uphold their end of the settlement or judgment. It is also worth noting that sections 178(1)(b) and (c) of theBankruptcy and Insolvency Act provide protection for ongoing spousal and child support payments, despite a discharge from bankruptcy.

If you find yourself facing a similar situation, or any facing any issues pertaining to divorce, myself or any family lawyer at Stringam Denecky LLP would be pleased to meet with you to discuss potential resolutions.